Property Newsletter: September 2018

Peter Petts obtained possession of a property for his client, which his client didn’t even know he had bought.  It took some explaining to the judge.

Steven Woolf spent most of August preparing for or waiting patiently outside Court 37 of QBD as he secured 4 more protective injunctions for different London Boroughs in the continued fight against unlawful occupation and fly-tipping.

Jamal Demachkie has had a busy Summer with lots of urgent work involving L&T disputes, claims involving allegations of fraud and breach of duty, and applications to discharge covenants.  He also took a rare holiday (which is now a long distant memory).

Daniel Gatty was on holiday for a substantial chunk of August.  Since his return his time has been taken up with matters as diverse as a partnership and co-ownership dispute between GPs and a residential development delayed by bats.

Clare Anslow has had a surprisingly busy August with a string of last minute applications in the High and County court. It has become apparent that due to the large number of CMCs she has attended this month, she is going to have an incredibly busy time in November when they all come to trial.

Andrew Skelly has had a number of FtT service charge disputes. In one of the cases the County Court, 24 years ago, had determined that the roof was within the tenant’s demise, and that the tenant was responsible to repair. The tenant, who did not appeal, now says the judge was wrong, and seeks to relitigate the point. The FtT has therefore been grappling with arguments as to res judicata issue estoppel and abuse of process.

Charlotte John has spent August book-writing and perfume-making, and resolving a number of troublesome cases, including setting aside a transfer procured by undue influence and successfully settling a farming dispute involving constructive trusts.

Morayo Fagborun-Bennett has been busy obtaining injunctions in the youth court and dealing with service charge and collective enfranchisement disputes since her return from maternity leave.

When not trying to cycle under the intense Spanish sun, Simon Allison has had 2 mediations (one successful, one not), and advised on matters as diverse as options to purchase, renewal of marina infrastructure, trespass and the ever present topic of liability for fire safety works.

Laura Tweedy has had a lovely busy August, mostly advising on TOLATA matters and acting in trials in the FTT, Mags and County Court.

Alastair Redpath-Stevens has had an interesting month with sundry day trips to various County Courts, including down to the seaside at Brighton, as well as enjoying the somewhat less picturesque scenery at the First-tier-Tribunal (Property Chamber). But he is going to Oslo to chair a charity meeting …

Wigmore Homes (UK) Ltd v Spembly Works Residents Association Ltd [2018] UKUT 252 (LC)

Landlord & Tenant Act 1985 – Service Charges – Interim payments – Conditions Precedent – Reasonableness

The UT (LC) allowed an appeal by the leaseholder where it was argued that (1) the sums demanded on account of service charges were not reasonable because the landlord had failed to comply with the service charge mechanisms required by the Lease and; (2) that the landlord had failed to justify the sums sought.

The landlord issued proceedings in the FTT for the recovery of service charges for a 7-year period, where no payment had been made by the leaseholder. The FTT held that all sums were payable. The leaseholder appealed and permission to appeal was granted on the issue of the role of certificates in the contractual scheme of the lease and whether the lack of a certificate showing overpayments was relevant to the considerations of reasonableness.

The leaseholder’s arguments focussed around the question of whether a valid certificate is a condition precedent to the recovery of monies due in respect of a service charge or interim service charge by virtue of clause 5.1 of the Lease:

The Tenant covenants with the Landlord:

“To pay to the Landlord on the date hereof a proportionate sum on account of Service Charge to the next following 24th March or 28th September and thereafter on 25th March and 29th September in each year such sum as the Landlord shall consider is fair and reasonable on account of the Service Charge and forthwith on receipt of the Certificate (as hereinafter defined) to pay to the Landlord any balance of the Service Charge then found to be owing Provided Always that any overdue Service Charge may be recovered by the Landlord as if the same were rent in arrears.”

The UT (LC) allowed an appeal by the leaseholder where it was argued that (1) the sums demanded on account of service charges were not reasonable because the landlord had failed to comply with the service charge mechanisms required by the Lease and; (2) that the landlord had failed to justify the sums sought.

The landlord issued proceedings in the FTT for the recovery of service charges for a 7-year period, where no payment had been made by the leaseholder. The FTT held that all sums were payable. The leaseholder appealed and permission to appeal was granted on the issue of the role of certificates in the contractual scheme of the lease and whether the lack of a certificate showing overpayments was relevant to the considerations of reasonableness.

The leaseholder’s arguments focussed around the question of whether a valid certificate is a condition precedent to the recovery of monies due in respect of a service charge or interim service charge by virtue of clause 5.1 of the Lease:

The Tenant covenants with the Landlord:

“To pay to the Landlord on the date hereof a proportionate sum on account of Service Charge to the next following 24th March or 28th September and thereafter on 25th March and 29th September in each year such sum as the Landlord shall consider is fair and reasonable on account of the Service Charge and forthwith on receipt of the Certificate (as hereinafter defined) to pay to the Landlord any balance of the Service Charge then found to be owing Provided Always that any overdue Service Charge may be recovered by the Landlord as if the same were rent in arrears.”

The UT found that there was nothing in the first half of the clause which makes the payment of the interim charge dependant on certification; that requirement is only imposed for the balancing charge. The fact that the two halves are in the same clause does not affect the position. In this case the interim payment is set by reference to what the Landlord shall consider fair and reasonable and not by reference to what may be certified.

The UT therefore dismissed the leaseholder’s arguments on condition precedent in relation to the certificate. However, they rejected the argument that the lack of certificate would never be relevant to a reasonableness challenge, holding that the burden was on the landlord to show its demands were reasonable and should be justified by reference to evidence.

In this case, the UT decided that the landlord had not produced the necessary evidence to show that the demands were reasonable. Rather than remit the matter back to the FTT (which would have involved considerable additional expense to the parties) the UT remade the decision reduced the demands by 50% for six out of the seven years that were subject to challenge.

If you would like to discuss any of the topics in this newsletter, please contact a member of our Practice management team.

This edition of the Hardwicke Property team newsletter was edited by Simon Allison.

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